60 Minutes - The Day of Reckoning

It won't be longer before the public can no long deny what 60 Minutes has recognized. The Day of Reckoning is near.

It's a good but predictable watch for long-time readers.

Source: amazon.com

The Horse Is Not Drinking

It's certainly difficult to positively spin the commercial banking lending trends. The percentage of total, business & commercial, and real estate loans to total credit continue to contract since the onset of the crisis in 2008. Business & commercial and real estate loans which accounted for nearly 60% of total credit creation in 2008 have contracted to nearly 50% in 2010. Even consumer loans which had carried more of the credit creation burden after 2008 is beginning to weaken.

Where’s all the (bailout) cash going? The table below reveals that an increasing amount has been heading for Treasury and Agency debt. Treasury and agency debt as a percentage of total bank credit has risen from a low of 12.1% in 2008 to high 17.7% in 2010.

There’s an old saying that you can lead a horse to water (access to credit) but you cannot make it drink (borrow).

Breakdown of Total Bank Credit:

The Unusual Concentration in Natural Gas Continues

The concentrated money flows in natural gas (NG) flag continue to flag bullish tendencies despite the bearish supply reports. Connected and retail players have increased their net long positions into weakness; the retail long positions represent over 11% of the total open interest. This concentration is unusual as retail money as "chasers" tend to be on the wrong side of the trade at inflection points. A quick review of the money flows illustrates that trading tendencies common to other markets do not always apply to NG.

The heavy concentration of longs by connected players; nevertheless, warrants close attention. NG will most likely chop until the line of least resistance is established. The bearish supply reports, while contradicting the message from the leveraged market, have the specs plunging again. The spec short position at greater than 36% of open interest remains highest reading in nine years. In other words, the black boxes known for their tendency to race for a very small exit when “spooked” are aggressively short. This alone warrants a technial eye be placed on NG.

Natural Gas ETF and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Natural Gas ETF and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Headline: Natural gas falls further after inventories report

Natural-gas futures fell further Thursday after the U.S. government's weekly storage report showed a withdrawal from supplies that was slightly more than forecast. The Energy Information Administration said working gas in storage fell 164 billion cubic feet from the prior week. Analysts polled by Platts were looking for a reduction of between 159 and 163 billion cubic feet for the week ended Dec. 10. Natural gas for January delivery was down 13 cents, or 3.2%, for the session to $4.09 per million British thermal units. It had traded around $4.18 ahead of the report.

Source: marketwatch.com

Fancy ATM skips the folding cash, spits out gold

The market, legit or black, always finds a way.

BOCA RATON, Fla. (AP) — Shoppers who are looking for something sparkly to put under the Christmas tree can skip the jewelry and go straight to the source: an ATM that dispenses shiny 24-carat gold bars and coins.

A German company planned to install the machine Friday at an upscale mall in Boca Raton, a South Florida paradise of palm trees, pink buildings and wealthy retirees.

Thomas Geissler, CEO of Ex Oriente Lux and inventor of the Gold To Go machines, says the majority of buyers will be walk-ups enamored by the novelty. But he says they're also convenient for more serious investors looking to bypass the hassle of buying gold at pawn shops and over the Internet.

Source: timesherald.com

From Bob

Influence the Masses to Manage Price

The Asians are using the paper operations in gold and silver to reduce their exposure to the dollar and index to gold with the intent of purchasing physical at a later date. The paper operations have become of tools of the patient buyers.

This is why the headlines proclaiming to reveal China's true intentions, such as bearish views on gold, cannot be trusted. They are also tools intended to misdirect and aid their purchases without disrupting the exchanges or market price.

Jeese Livermoore described how little things have change in a hundred years.

If the World (newspaper) had not published that article - July Cotton Cornered by Jesse Livermoore - I never would have been able to dispose of my line without sacrificing the greater portion of my paper profits. Selling one hundred and forty thousand bales of July cotton without sending the price down was a trick beyond my powers. But the World story turned it for me very nicely. Why the World published it I cannot tell you.

The Chinese with trillions of dollars to hedge have learned the lesson of influencing the masses (herd) to manage price. This is why today’s headlines, often planned and coordinated, are so transparent to the trained eye.

Headline: When that happens, the game is over

So the Asians are exercising patience in converting all of these spot purchases to physical?

“If these guys converted all of their spot to physical, there would be a massive default today. No one in the US understands that, the Asians are laughing at these guys. It’s a way to unload billions and billions of dollars into the market. Looking at the futures market gives you a totally false impression of what is going on, this is going to totally blow up. Remember if you are China, your primary goal is to get out of trillions of dollars, that means purchasing hard assets such as gold and silver.”

How sustainable is that?

“It’s eventually going to blow because at some point these buyers will say, ‘I’m indexed, but I actually want to get all of this physical gold and silver now.’ When that happens, the game is over.”

Source: kingworldnews.com

Portugal May Get Frozen Out by Bond-Sale `Avalanche' in 2011: Euro Credit

Better get out those search dogs, because the avalanche might threaten those higher-rated governments and agencies as well.

Portugal risks being frozen out of the bond markets next year amid a wave of auctions from higher- rated governments and agencies that threaten to force the nation into seeking a bailout to pay its debts.

“It has become the market consensus that Portugal’s ability to fund on a standalone basis is fairly constrained,” said Jamie Stuttard, head of European and U.K. fixed income at London-based Schroders Plc, which has $286 billion under management. “People have investment alternatives.”

Source: bloomberg.com

Message of the Markets Before Opinions of the Street

The "discussion of doubt" for gold and silver starts 12.25. The prevailing opinion of silver comes at 17.25.

While gold and silver are struggling at the upper trading channel, the technical line in the sand, their technical setups remain constructive. We have characterize this zone as the battle for the bridge until the line of least resistance materializes.

Gold, London P.M. Fixed:


Opinion on the Street says that the gold to silver ratio (GSR) will not fall below the 1998 low. The message of the silver market does not agree.

Gold to Silver Ratio (GSR):


Word on the Street